Monday, March 26, 2007

A stomach virus

Albert had been calling for months and keeping me on the phone for hours talking to me about the stock market. We went to a Yankee game one day and it's all we talked about. It was really boring. If you're not a trader, "bids" and "asks" don't mean crap... and even the idea of a guy named "the specialist" who controlled the way stocks moved and routinely screwed everybody seemed insane. But then, Albert had made $75,000 in the last month. He showed me the check. This caught my attention. Still, I wasn't going to make the decision to go further into debt and to take a job with no guaranteed salary or benefits lightly. So Albert invited me to "sit in" and watch him trade so I could get a feel for the job.

I didn't mind calling in sick to the job I was preparing to leave. The place was nice and everything, it was an internet company, one that eventually had success, but the pay was awful. Instead of a good salary, you could basically come and go as you pleased as long as you got your work done. There were other advantages as well. They served beer and pizza at company "meetings" and each week we all played softball together. Oh, and there was the day the head of the office brought in a few large cardboard boxes full of those little plastic balls that kids jump around in at indoor playgrounds... Fun? Yes. But I had student loans and bills to pay. Anyway, I received 100 shares of company stock priced at about 15 or so. The stock debuted in the 30s and on it's first day of trade vaulted over 100. I sold the next day in the 80s.

It was my first stock "trade". It was also the easiest...

Between that and Albert's success, I was excited about this thing called the "stock market" which I hadn't thought about during the first 22 years of my life. And so the following Monday, I had a "stomach virus" and made the trip downtown.

A damn shame...

Well, as noted in my intraday post, I really managed to screw up an otherwise decent day with my poor trades in FED. I need to talk to One Bad Trade... perhaps we should switch domain names...

Here's where I ended:

Net: $138

Best stock: IPS $298
Worst stock: FED -$548

My second worst stock was -$48. I had 4 winners for over $100. So really, if I could just erase the stupidity of FED I had a decent day. I can't erase that stupidity...

Hopefully, I can at least learn from it.

The silver lining for me today is that I had some decent success with limit orders. Normally, I trade at market. However, the hybrid market makes this a very sketchy proposition so I've been experimenting with limits.

Another positive sign for me was that I traded a lot. I made nearly 300 trades. It's important that I get involved in the market before the beginning of earnings season.

I'll have another "history" post up before the open tomorrow.

2 steps forward, 1 step back

Well, things were kind of slow this morning until that new home sales data was released at 10. Then the fun began!

I was up a couple hundred due mostly to a decent IPS trade. When the data came out, I got short a couple of the mortgage lender stocks, RAS and CFC. My p&l shot up to about $700. Problem was that I then decided to start buying another lender when I saw CFC put in his bottom. This particular stock, FED, didn't give a DAMN that CFC had bottomed and I lost about $400 in him.

This was unbelievably stupid.

On the accompanying graph, I've marked where I was buying the stock with the light blue dots. Notice how the dots kept going down... and my p&l followed. So I'm $500 off my highs of the day here at 11:15 and I'm only up $230. This makes me very concerned that if I continue to trade I'll go negative. So I'm going to sit patiently and watch for the next couple of hours instead of trade.

Last week, Traderfeed put up a great post about The Anatomy of a Stock Breakout. I even posted a comment, thanking him and remarking that I often try to manufacture or anticipate trades instead of waiting for a trend to develop. Unfortunately, part of what I did wrong in FED was exactly that. I was anticipating a bottom and so I was burned.

Lesson learned?